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Why BEST Inc. Stock Fell Friday

By Daniel Sparks - Nov 9, 2018 at 8:05PM

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Strong revenue growth wasn't enough to impress BEST investors.

What happened

Shares of China-based smart-supply-chain service provider BEST (BEST 0.00%) declined on Friday, falling as much as 15.5%. But the stock ended the trading day down 12.6%.

The stock's decline is likely attributable to BEST's wider-than-expected loss per share for its just-reported third quarter.

A chalkboard sketch of a chart showing a white arrow falling.

Image source: Getty Images.

So what

BEST reported third-quarter revenue of 7.2 billion renminbi (RMB), or about $1.05 billion. This was up 34% year over year.

"BEST continued to generate strong growth in the third quarter," noted BEST CEO Johnny Chou, "benefiting greatly from demand for our integrated supply chain services and solutions as a result of healthy e-commerce and New Retail growth, further industry consolidation, and our sharp strategic focus and execution."

BEST's earnings per share for the quarter was a loss of $0.02, or a loss of $0.04 on a non-GAAP basis. This missed a consensus analyst estimate for earnings per share of $0.01.

Despite the wider-than-expected loss, BEST's gross profit margin notably improved by 1.6 percentage points year over year, to 5.4%.

Now what

Looking ahead to Q4, management noted it will focus on top-line growth and further margin expansion.

For the company's fourth quarter, management said it expects revenue between RMB$7.9 billion and RMB$8.1 billion. This translates to approximately $1.1 billion to $1.2 billion. 

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